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JOINT CIRCULAR

Guiding the implementation of a number of articles of the Government's Decree no. 130/2006/ND-CP of November 8, 2006, which provides for the compulsory fire and explosion insurance regime

On November 8, 2006, the Government promulgated Decree No. 130/2006/ND-CP providing for the compulsory fire and explosion insurance regime (below referred to as Decree No. 130/2006/ND-CP for short). The Ministry of Finance and the Ministry of Public Security uniformly guide the implementation of a number of articles of this Decree as follows:

I. GOVERNING SCOPE, SUBJECTS OF APPLICATION

1. This Circular guides the implementation of the regime of compulsory fire and explosion insurance for assets of establishments obliged to buy compulsory fire and explosion insurance; responsibilities of insurance enterprises for deducting funds for fire prevention and fighting activities and mechanisms for management of the allocation, settlement and finalization of these funds.

2. This Circular applies to agencies, organizations and individuals that have establishments prone to fire or explosion as defined in Appendix 1 to the Government's Decree No. 35/2003/ND-CP of April 4, 2003, detailing the implementation of a number of articles of the Law on Fire Prevention and Fighting (below referred to as Decree No. 35/2003/ND-CP for short) and insurance enterprises licensed to conduct compulsory fire and explosion insurance business.

II. IMPLEMENTATION OF THE COMPULSORY FIRE AND EXPLOSION INSURANCE REGIME

1. Agencies, organizations and individuals that have establishments prone to fire or explosion as defined in Appendix 1 to the Government's Decree No. 35/2003/ND-CP are obliged to buy compulsory fire and explosion insurance for assets of their establishments.

2. Insurance enterprises licensed to conduct compulsory fire and explosion insurance business are enterprises which have founding and insurance business permits granted by the Ministry of Finance.

3. Responsibility to buy compulsory fire and explosion insurance

a/ For establishments obliged to buy compulsory fire and explosion insurance, heads of agencies or units or individuals that have those establishments shall buy compulsory fire and explosion insurance.

b/ For an establishment containing many households such as dormitories or condominiums, or an establishment leased by many agencies, organizations or individuals, the responsibility to buy compulsory fire and explosion insurance is defined as follows:

- When the owner of such establishment or the person assigned by that owner to act as the establishment's manager or his/her representative (below collectively referred to as representative) is identifiable, such representative shall buy compulsory fire and explosion insurance. Each household, agency, organization and individual shall pay insurance premiums to that representative. In this case, the insured include households, agencies, organizations and individuals that have paid insurance premiums to the representative.

- When the representative is unidentifiable, each household, agency, organization and individual within that establishment shall personally buy compulsory fire and explosion insurance.

4. Insurance enterprises, agencies, organizations and individuals shall implement the compulsory fire and explosion insurance regime according to compulsory fire and explosion insurance rules and premiums promulgated by the Ministry of Finance. In case of damage, competent Public Security agencies shall identify the causes of fire or explosion leading to the damage.

5. The buyers of, and assets subject to, compulsory fire and explosion insurance; the minimum compulsory fire and explosion insurance sum; compulsory fire and explosion insurance contracts, and other issues of the compulsory fire and explosion insurance regime must comply with Chapter II of Decree No. 130/2006/ND-CP.

6. Fire prevention and fighting police agencies shall:

a/ Instruct establishments obliged to buy compulsory fire and explosion insurance to inspect by themselves fire prevention and fighting safety and comply with fire prevention and fighting safety conditions specified in Article 9 of Decree No. 35/2003/ND-CP.

b/ Conduct quarterly inspections of fire prevention and fighting safety of establishments prone to fire and explosion; conduct extraordinary inspections when detecting signs of danger or unsafety of fire prevention and fighting or at special requests. Inspection records must contain conclusions on establishments' satisfaction or non-satisfaction of fire prevention and fighting conditions as provided for in Article 9 of Decree No. 35/2003/ND-CP.

7. Fire prevention and fighting police agencies shall grant certificates of satisfaction of fire prevention and fighting conditions to establishments prone to fire or explosion defined in the Appendix 2 to Decree No. 35/2003/ND-CP.

The order and procedures for grant of certificates of satisfaction of fire prevention and fighting conditions must comply with Section VII of the Public Security Ministry's Circular No. 04/2004/TT-BCA of March 31, 2004, guiding the implementation of Decree No. 35/2003/ND-CP.

8. An insurance enterprise shall enter into a compulsory fire and explosion insurance contract with an insurance buyer only when the insurance buyer has been granted by the fire prevention and fighting police agency a certificate of satisfaction of fire prevention and fighting conditions or when there is a record concluding that the establishment satisfies fire prevention and fighting conditions.

The insurance enterprise may not refuse to sell compulsory fire and explosion insurance to the insurance buyer that has satisfied fire prevention and fighting conditions specified in Clause 2, Article 13 of Decree No. 130/2006/ND-CP.

Quarterly, insurance enterprises shall make reports on compulsory fire and explosion insurance business results according to a set form and send them to the Ministry of Finance.

III. MODE OF MAKING CONTRIBUTIONS TO FIRE PREVENTION AND FIGHTING ACTIVITIES

1. Compulsory fire and explosion insurance business enterprises shall deduct and contribute 5% of the total collected compulsory fire and explosion insurance premiums to fire prevention and fighting activities.

Within 15 days counting from June 30 and December 31 every year, insurance enterprises shall transfer the amounts contributed to fire prevention and fighting activities into the Public Security Ministry's custody account opened at the Central State Treasury, make reports on the implementation situation according to a set form and send them to the Ministry of Finance.

2. For a package insurance contract covering also compulsory fire and explosion insurance, the insurance enterprise shall make a separate annex on compulsory fire and explosion insurance which includes all the contents specified in Article 9 of Decree No. 130/2006/ND-CP.

3. Within 90 days after the end of a fiscal year, insurance enterprises shall make reports on finalization of funds to be contributed to fire prevention and fighting activities according to a set form and send them to the Ministry of Finance.

Insurance enterprises shall compare the data on funds already contributed with those on funds to be contributed in the finalization report; if the contributed fund is larger than the fund to be contributed, the surplus shall be included in the fund to be contributed in the subsequent year; if the former is smaller than the latter, the enterprises shall pay the deficit within 5 days.

The Ministry of Finance shall inspect the accuracy of reported data and urge insurance enterprises to make all required contributions.

IV. MANAGEMENT, ALLOCATION, PAYMENT AND FINALIZATION OF CONTRIBUTIONS TO FIRE PREVENTION AND FIGHTING ACTIVITIES

1. Annually, based on the expenses specified in Clause 2, Section IV of this Circular, the previous year's revenues and the plan year's revenues, the Ministry of Public Security shall make estimates of revenues and expenditures of contributions to fire prevention and fighting activities, include such estimates in its annual budget estimates and send them to the Ministry of Finance for synthesis and submission to competent authorities for decision.

2. The 5% contributions from compulsory fire and explosion insurance business shall be used for fire prevention and fighting activities as follows:

a/ Investment in fire prevention and fighting facilities and equipment of fire prevention and fighting police forces. This investment must not be lower than 70% of the fund actually spent on fire prevention and fighting activities in the year; the remainder, not exceeding 30% of the actually spent fund, shall be used for activities specified at Points b and c of this Clause.

b/ Supports for the communication, guidance and dissemination of legal knowledge and general knowledge about fire prevention and fighting to the public. Detailed supports and their levels must comply with the Finance Ministry's Circular No. 63/2005/TT-BTC of August 8, 2005, guiding the management and use of funds for law dissemination and education.

c/ Supports for the commendation and reward of the following subjects for their achievements in fire prevention and fighting activities:

- Organizations and individuals directly engaged in fire prevention and fighting;

- Organizations and individuals coordinating in fire prevention and fighting.

The reward level must not exceed VND 5 million, for collectives, or VND 3 million, for individuals. The Ministry of Public Security shall specify the commendation of, and reward funds for, organizations and individuals that make achievements in fire prevention and fighting.

3. Biannually, the Ministry of Public Security shall carry out procedures for accounting funds from its custody account into the state budget. At the year-end, the balance between premium revenues already accounted into the state budget and the cost estimates at the beginning of the year shall be subtracted or added to the revenue-expenditure estimate of the compulsory fire and explosion insurance fund of the subsequent year.

4. The Public Security Ministry's Fire Prevention and Fighting Police Department shall receive, manage and use insurance enterprises' contributions to fire prevention and fighting activities.

5. The Central State Treasury shall control expenses while allocating funds to fire prevention and fighting activities according to approved cost estimates.

6. Annually, the Ministry of Public Security shall approve the finalization of expenses of the fund contributed to fire prevention and fighting activities, include those expenses in its state budget finalization reports, and send such reports to the Ministry of Finance for synthesis and submission to competent authorities for decision.

7. Compulsory fire and explosion insurance business activities' contributions to fire prevention and fighting activities which have not yet been spent up at the year-end shall be transferred to the subsequent year to cover expenses for the contents under the guidance of this Circular.

V. ORGANIZATION OF IMPLEMENTATION

This Circular takes effect 15 days after its publication in "CONG BAO." Problems arising in the course of implementation should be reported to the Ministry of Finance and the Ministry of Public Security for timely guidance.